News in Brief

The Role of Cash in War

News from Ukraine is grim following Russia’s invasion. It highlights, yet again, the role of cash at times of huge stress. In Russia and in Ukraine people have turned to cash. with large queues at bank branches and ATMs. The National Bank of Ukraine enacted a temporary cash withdrawal limit of 100,000 Ukrainian hryvnia per day (c. $3,339).

In Romania, in response to the influx of Ukrainian refugees, the central bank has instructed lenders to increase how much foreign currency, particularly euro banknotes, they hold. Commercial banks are regulated and have access to additional cash, but private exchange offices rely on supply and demand. The Romanian press reported their exchange rate increasing from an interbank market level of 4.95 lei to 5.3-5.4 lei per euro.

Yet again, the dreadful situation in the Ukraine raises the question about the usefulness of bank accounts, banking apps, bank cards or cryptocurrencies when power is uncertain, the internet and phone lines are not guaranteed and restrictions limit or even stop cash movements. When the impossible happens, whether natural or manmade, the value of cash is clear.

CSA in the Philippines Reduces Operating Costs

The Cash Services Alliance (CSA) in the Philippines allows commercial banks to share peso banknotes directly between themselves, bypassing the Bangko Sentral ng Pilipinas (BSP). This award winning alliance of the BSP and the Bankers Association of the Philippines has allowed P302 billion worth of banknotes to be sourced through the CSA between October 2020 and December 2021.

The CSA estimates banks have saved P119 million in operating expenses through the scheme. It also allowed them to operate effectively when the Philippines implemented extremely strict lockdowns between March and May 2021.

The CSA will continue post-pandemic because it will also be useful during emergency situations, weather disturbances, and localised holidays that affect banking operations.

Cash Store of Value Role Remains in Denmark

In Denmark cash may only be used in 12% of transactions, but one in four person-to-person transactions are made in cash and one in three Danes hold cash at home as a reserve. How much people hold has also increased.

Continued Growth in Naira in Circulation

Nigerian’s currency in circulation rose in value by 19.6% in calendar year 2020 and a further 14.4% in 2021. The top four denominations account for 63% and 98% of currency in circulation by volume and value respectively – the N100, N200, N500, N1,000. The lowest four denominations account for 28% and 2% of currency in circulation by volume and value respectively – the N5, N10, N20, N50. No coins were issued.

Nigerian media report that in the Lagos area, only about 60% of ATMs regularly dispense cash. A highly anecdotal article reports the conspiracy theory that this is to drive bank customers to use point-of- sale agents to get cash, although with an alternative suggestion that this is the banks trying to drive people to use electronic payment methods. The Bank Customers Association of Nigeria (BCAN) suggested, however, that the problem was driven by poor maintenance of ATMs and the poor quality of Nigerian banknotes.

Central Bank of Nigeria data shows the number of ATM transactions increasing to 968 million by 2020, up from 348 million in 2011. Despite the rise in electronic payments, ATM transactions still represented 93% of payment transactions.

Cash Services Under Pressure in China

China Daily reports that the elderly, rural residents, small and micro-sized enterprises and self-employed businesses still often prefer cash payments. The People’s Bank of China (PBoC) is considering, therefore, legislative and administrative measures to improve renminbi cash services. The risk is that if too many offline institutions don’t accept cash, these groups will suffer.

PBoC and the China Banking and Insurance Regulatory Commission have ordered all commercial banks and rural credit cooperatives with physical outlets to provide renminbi deposit and withdrawal services. Two banks, Zhongguancun Bank and NewUp Bank, both of which had announced they would stop providing cash services in the light of the digital transformation taking place, are reported to have reversed this decision.

PBOC reports that is has fined 32 entities, including public services institutions, for refusing to accept cash in the fourth quarter last year, with the fines for each ranging from 1,000 yuan to 100,000 yuan.

In 2021 official data shows that cash in circulation grew 7.7% and 651 billion yuan was issued by PBoC.

Significant Reduction in ATMs in Saudi in 2021

In 2021 Okaz and the Saudi Gazette reported that 1,755 ATMs were taken out of service in Saudi Arabia that year. Government reports show a reduction of 9.6% to 16,544 machines.

The reason for the fall is unclear, although the paper blames the growth in electronic payments.

Kurz Issues Sustainability Report

Optical security feature and foil manufacturer Leonhard Kurz has reported on its sustainability programme. In 2021 it joined the UN Global Compact initiative, has put in place extensive environmental management systems and appointed an environmental officer, is mapping out its scope 1, 2 and 3 emissions and is signed up to ISO 14001, 50001 (energy management) and 45001 (occupational health and safety).

At a product level, Kurz has introduced a customer take-back and recycling programme for any residual materials, RECOSYS®, and started using a high- quality recycled granulate which is made from production waste, RECOPOUND®. The RECOSYS waste is processed into new raw materials for the company. RECOPOUND allows up to 40% of the CO2 to be saved compared with using new material.

Kurz obtains its entire electricity demand in Germany from renewable sources, partly through purchased green electricity, and partly through its own photovoltaic systems. At its Sulzbach-Rosenberg site, Kurz will soon have a solar farm in operation providing 20-25% of the site’s electricity, saving 6,000 tonne of CO2 a year. At a lower level, the company is placing emphasis on e-mobility and hybrid technology, and the lighting is being switched to LED.

For the future, the goal is to reuse recycled PET carrier material in the production of new transfer carriers, creating a true circular cycle. Around 30% of the raw materials used in Kurz’s decorative foils is currently of organic origin, and the company is working to increase this share to up to 80%.